When I first began as a “newbie” real estate investor back in 2002, I was confused by all of the websites that claimed to provide a listing of Houston foreclosures. I wasn’t sure which ones provided the most leads, which ones provided higher quality leads, which one provided more bang for my buck, and so on. It was a maze out there, and I was lost.
After spending several years in the business, it’s all much clearer. Here’s what I now know. In short, there are three categories of Houston foreclosures websites: 1) Those that offer actual foreclosures, 2) those that offer pre-foreclosures, and 3) those that offer “pre pre” foreclosures. Each category of foreclosures has pros and cons, and the category that works for one person may not work for another. It all depends on what your goals are. Let me explain the three categories in greater detail.
Category 1 – Actual Foreclosures: Foreclosures are properties that have already been foreclosed on. They’re usually owned by a bank or the government. They’re best for people who are looking for a home to live in, NOT investors. You’ll get less of a discount – maybe 10-15% off retail – but the whole process is easy. Look through the list, find what you like, and ask your Realtor to go show it to you. And then have that Realtor make the offer and handle the negotiations. Very simple. There are probably fifty websites that contain actual foreclosures, but three of the most popular ones are currentforeclosures.com, foreclosure.com, and realtytrac.com. These are national websites, but they are full of Houston foreclosures.
Category 2 – Pre-Foreclosures: Pre-foreclosures are properties that will head to the auction in one to three months. A notice has been filed at the courthouse. They’re best for real estate investors who are willing to do some work or spend some money in an effort to get a bigger discount. After you meet with a few sellers and make a few offers, you’re likely to find a property that you can buy at about a 30% discount. At least that’s what you should be shooting for. If you choose to mail to these lists, you’ll likely spend hundreds of dollars in postage. If you choose to knock on the sellers’ doors, you’ll likely spend dozens of your own man-hours. If you want the discount bad enough, these issues are tolerable. When I was first starting out and desperately needed the money, I pursued pre-foreclosures, but they’re too much trouble for me nowadays. I’ll let the new batch of “newbies” chase them! Quality pre-foreclosure websites in Houston are foreclosehouston.com and realdata.net. They’re both local.
Category 3 – “Pre Pre” Foreclosures: “Pre pre” foreclosure websites contain listings of properties that haven’t hit the official pre-foreclosure lists or the actual foreclosure lists yet. They are best for investors who want a 30% discount or so but don’t want to spend all of the money on postage or the man-hours knocking on doors. The advantage is less money and less time spent. The disadvantage is that there are generally fewer properties to choose from, so you’ll probably have to drive outside of your immediate zip code to find the one that gives you the profits you desire. Popular “pre pre” foreclosure websites are myhousedeals.com and propertyleadsnow.com.
The category of Houston foreclosures that you choose to pursue is up to you. It just depends on whether you’re an investor or an owner-occupant, and it depends on how much time or money you’re willing to spend. I’ve bought 41 houses, and 60% to 70% of those were “pre pre” foreclosures.